Uncertainty related to pending decisions in Washington has been holding many business leaders back from making key decisions related to cash expenditures. This in turn has a negative impact on the economy. The hope is that the President and Congress, the latter being essentially unchanged in composition, will face the hard realities relative to the fiscal cliff and tax reform and clarify expectations. Business needs an answer.
The question is whether the President and Congress will kick the proverbial can down the road or grapple with these important issues. Kicking the can continues the uncertainty, and it will hurt businesses related to spending on capital goods.
My understanding/expectation is that Congress, because it is of the same composition, will reach some sort of agreement on the fiscal cliff late this year or in early 2013 – removing an avowed cause of uncertainty and thereby providing a boost to economic activity.
Adding to my positive outlook is the fact that virtually all of our leading indicators are pointing toward more economic expansion over the next two quarters. This is the time to take advantage of pessimism and low prices. Spend some money to upgrade operations in an effort to maximize efficiency.